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Michelle Malkin Is Dead Wrong on “Tax Pork” in the Bailout

By Ryan Ellis (the Taxplaya)

I was shocked to read this morning that [Michelle Malkin] (http://michellemalkin.com/2008/10/01/mccain-will-support-earmark-stuffed-senate-crap-sandwich/), in her totally legitimate opposition to the bailout, equated tax cuts with spending increases. The New York Post did the same thing on their [cover] (http://www.nypost.com/seven/10022008/frontback.htm). Scarborough was positively livid this morning on Morning Joe. What the hell is going on here?

In an effort to get the bailout through, the Senate appended to it the tax extender package. A conservative Senate staffer who shall remain nameless dubbed these tax increase preventions “tax earmarks” and sent it around on a prominent anti-pork listserv. Before you knew it, the conservative blogosphere was alight with charges of “pork” and “earmarks” in the bailout bill.

To state the obvious, tax cuts are not the same as spending increases. I guess Malkin, et al need to be re-told this blindingly obvious fact.

Calling tax cuts “earmarks” is very unhelpful and completely wrong from a fiscal conservative perspective. There is no such thing as a “tax earmark.” Earmarks are spending. There are appropriations earmarks. There are authorization earmarks. There are no “tax earmarks.” To claim that there are puts tax deductions and credits (which is what we’re talking about here) on the same par as bridges to nowhere. Was the creation of HSAs a “tax earmark?” How about the home mortgage interest deduction? One might call for lowering the rates and broadening the base, but we should not fall into the trap of equating tax cuts and spending increases. That’s how some Senate Republicans got in such massive trouble over health care last year and energy this year vis-à-vis taxes. When the distinction between spending programs and tax cuts is confused, people think it’s all the same and you end up with a net tax increase. It’s this confusion between tax cuts and spending increases that I’ve found is the number one cause of well-meaning elected officials slipping into Taxpayer Protection Pledge violations.

We’ve spent 50 years as a movement fighting the idea that Ted Kennedy is entitled to 100% of your money, and that a tax cut is just another way of doling out welfare funds. Rhetoric like “tax earmarks” and “tax pork” reverse all the hard work of those us who argue that Washington has a spending problem, not a tax problem.

I would exempt from my statement the outlay effects of refundable tax credits (the vast majority of the Obama “tax cuts,” incidentally). Those are, indeed, welfare entitlement spending. Less than ideal tax cuts at least deprive Leviathan of resources. Some of them are baby steps toward comprehensive reform (like targeted depreciation rules). Others de-fund government spending programs (like the bows and arrows excise tax repeal). Still others (the bulk, in fact, of this package) prevent tax increases from happening. It’s foolish for conservatives to be out there equating government bureaucratic check writing with targeted tax cuts.